With crude oil prices drastically dropping to a level of about $50-52 per barrel with the outbreak of COVID 19, India has reasons to cheer. The drop in prices will help India save on its import bill by a good 15-17 per cent in new financial year beginning April.

Not just that. Average crude prices that were expected to be around $66 per barrel in the last quarters of January-March in the current financial year. However, prices have hovered around $50 per barrel in the January-February period, which will give a huge boost to the country’s fisc.

Crude oil prices have risen considerably in calendar 2019 and had become a cause for concern for the government. India imports over 80 per cent of its oil needs annually.

Analysts said that the crude oil prices are unlikely to go up significantly in the coming months due to the coronavirus outbreak across the globe.

In 2018, global oil prices had breached the $70 per barrel level, raising concerns for the government. High oil prices have a direct fallout on domestic prices, while pushing the country’s current account deficit—the difference between inflow and outflow of dollars. India’s crude oil import bill in 2018-19 stood at $111.9 billion, a huge jump from $87.8 billion in 2017-18. In 2019-20, the government had estimated an import bill of $105.6 billion, a decline of 6 per cent. However, now with oil prices hovering around $50 a barrel, India can expect to save a larger chunk, which in turn would boost the country’s overall fiscal health and macro-economic stability.

The spread of COVID 19 is also set to bring down global oil and gas demand. According to the S&P Global Platta Analytics, global oil demand is estimated to grow 0.86 million barrels per day in 2020. Air and ground transportation in China, the epicentre of the deadly coronavirus, has been badly hit impacting the overall demand and supply chain of crude oil.

The USA is the world’s biggest consumer of oil , followed by China, Japan and India. The 10 biggest oil consuming countries account for more than 58% of the total global crude consumption per day..